Archive for August, 2009

Little or no money down? No problem!

August 26, 2009

Gone (long gone in fact) are the days of easy 100% financing. Conventional loan programs using 80/20 combo loans or 100% financing with Private Mortgage Insurance are a thing of the past. In fact, the minimum down payment for a conventional loan in Georgia is now 10%.

Think about that figure for a minute. On a $250,000 loan, the minimum down payment is $25,000. While conventional loans do allow gift funds, many buyers do not have that much money available for a down payment (especially first time home buyers).

So… conventional loans require 10% down. That is good to know, but what about the borrowers who do not have that much for a down payment? I’m glad you asked! There are several programs available that require little or no down in order to buy a home.

  • FHA loans: FHA loans require only a 3.5% down payment along with lighter credit and cash reserve requirements.
  • FHA 203K Streamline: This program also requires a 3.5% down payment, but there are provisions allowing borrowers to finance an additional $5,000-$35,000 for non-structural repairs/updates to a home (new roof, carpet, paint, siding, remodel kitchen/bath, etc.)
  • $100 HUD Homes: Many foreclosed homes owned by HUD are available to buy with only a $100 down payment using an FHA loan. The offer must be at the property’s asking price, and if accepted, the down payment would only be $100.00!
  • VA loans: VA loans allow 100% financing. Traditionally, these loans are available to U.S. Veterans and their spouses. However, the VA Vendee program allows borrowers to purchase VA foreclosed homes using a VA loan regardless of their U.S. Veteran status.
  • USDA/Rural Development loans: USDA loans also allow up to 100% financing. Property eligibility is based its location. If a property lies outside of a metro-area, there is a chance it would be eligible. To know for sure, you can go here to check.

Even though the current lending environment is definitely not what it used to be, options remain for borrowers with little or no money down. While some of the loan programs depend on the property itself, a 3.5% down payment can get borrowers into most homes on the market. Feel free to contact me for more information on any of these loan programs.

It’s nice to know that even now, you don’t need to break the bank in order to own a home!

It’s nice to know that even now, you don’t need to break the bank in order to own a home!

Clay Jeffreys is a Mortgage Consultant with Dunwoody Mortgage Services, Inc. and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.”  Dunwoody Mortgage Services seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about Dunwoody Mortgage and available programs, please visit www.dunwoodymortgage.net.

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Lending: the final frontier

August 18, 2009

Lending: the final frontier. These are the blog posts of a mortgage broker. My continuing mission: to explain strange new federal regulations, to seek out new loan programs and new lending sources, to boldly go where no mortgage broker has gone before.

It really does seem like science fiction with all the changes that have occurred over the past two to three years.  Think about it: in 2006, if I said that 100% financing would be nonexistent, conventional loans would require at least 10% down (3.5% for FHA), and defaults on subprime loans would lead to a crippling of our financial system that would help usher in the worst recession since the Great Depression… would anyone have believed me?

These changes have been so unexpected and unbelievable, they border on fantasy.  Sadly, it has been all to real for us!

The latest unforseen example: The federal raid and subsequent shutting down of Taylor, Bean & Whitaker shocked the mortgage world, leaving thousands of borrowers in a bind as they were in the process of buying or refinancing a home, but now facing the prospects of starting over. 

These events only reinforce the importance of working for a mortgage broker with multiple lending sources.  My clients never have to worry about being stuck without a source for their loan.  If one lender decides to only offer loans to borrowers with 20% down, or like TB&W, shuts their doors, I’m able to offer additional options to ensure my clients close on their home.

It’s a scary universe out there.  You never know when a Romulan warship will decloak, putting your life in danger (new Federal guidelines) OR when the Borg show up threatening to wipe out human civilization (TB&W’s sudden closing).  It’s best to work with a professional who is up-to-date on guideline changes and has a plan for action if disaster strikes.  I may just have a great referral for you as you look to buy or refinance a home.

Clay Jeffreys is a Mortgage Consultant with Dunwoody Mortgage Services, Inc. and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.”  Dunwoody Mortgage Services seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about Dunwoody Mortgage and available programs, please visit www.dunwoodymortgage.net.

The world may never know – a stimulus plan review

August 12, 2009

After a year and a half and three stimulus plan attempts later, where are in this economic downturn? One could argue that all of these plans have failed.  Jobs continued to be lost, the economy still hasn’t recovered.  The government wasted the $1.7 trillion dollars used to fix the economy.

The counter argument would be improving a country’s economy is like a turning a ship – it takes time.

Probably the best way to judge how things have gone thus far is to look at history and compare.  I’ve previously blogged (here and here) about the similar situation that Japan and Sweden faced in the 1990s.

  • Sweden acted swiftly with government bailouts to buy up “toxic assets” and helped the economy get back on course in a few years.
  • Japan initially refused to bailout the financial sector.  After ushering in The Lost Decade, the government issued their own bailout to buy up “toxic assets” to help the economy improve.

Where is the USA in this?  I would say definitely closer to Sweden than Japan.  The government began the bailouts pretty early to stimulate consumer spending, help prop up the major banks, and keep the financial infrastructure from completely collapsing.  With this help, there are signs that the economy is recovering.

  • job losses have slowed
  • housing sales are climbing
  • the GDP barely contracted in the 2nd quarter and some economists see the recession ending in the 3rd quater this year
  • consumer confidence is higher
  • stocks improved from their early March lows of 6500 (lowest levels since mid 1990s) to almost 9500 in August
  • the series of positive economic news pushed interest rates off of their historical lows into the low 5’s, which is actually a good sign for the health of an economy (not so good when buying a home)

An intriguing difference between our current situation versus that of Japan/Sweden is our bailout money was not used to buy toxic assets (at least not yet).  Instead, the money was used to buy stocks and prop up banks, which caused the stock recovery. Is this yet another bubble? Hopefully that is not the case!

Only time will tell if the bailouts were the right thing to do.  Without them, we could have seen the complete collapse of our financial system; possibly another Great Depression.  With them, the economic outlook certainly seems much brighter with stocks recovering, home sales climbing, and slightly higher interest rates… but we’ll never really know for sure if they (or how much they) were needed.

Clay Jeffreys is a Mortgage Consultant with Dunwoody Mortgage Services, Inc. and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.”  Dunwoody Mortgage Services seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about Dunwoody Mortgage and available programs, please visit www.dunwoodymortgage.net.

d’oh

August 5, 2009

In the famous words of Homer Simpson… “d’oh!

Why the reaction?  Well, interest rates are moving in the wrong direction. 

  • Lots of optimism on Wall Street and the Dow is now over 9,000.
  • Pending home sales now up for 5 straight months.
  • Ford posts big gains in the last month (primarily due to the “cash for clunkers” program).
  • Job losses at their smallest amount in 9 months, which only fuels the optimism on Wall Street.

This series of good economic news is a great sign that we may be at the bottom of the down turn.  The bad news is while stocks are surging, bonds are suffering and have dropped below the 200 day moving average – d’oh!

Twice this morning, bonds have tried to move back above the 200 day average, and have been beaten back twice.  As we all know, this is not good for interest rates and only pushes them higher.

Speaking of rates, they had moved below 5% on Friday, but are now sitting around 5.25%.  While this is still a fantastic interest rate, the trend direction in rates has taken a turn for the worse. Until the bond market can move back above the 200 day moving average, rates will not improve dramatically from their current levels.

If you are out looking for a home and are wondering whether or not to lock in your rate, not to worry, I can take the guesswork out of the decision.  Contact me and I’ll give you details on how we can lock your rate AND float it down for FREE if rates were to improve. 

It’s a win-win situation and puts you in a better position than this guy.

Clay Jeffreys is a Mortgage Consultant with Dunwoody Mortgage Services, Inc. and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.”  Dunwoody Mortgage Services seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about Dunwoody Mortgage and available programs, please visit www.dunwoodymortgage.net.